tag:blogger.com,1999:blog-68137695227792708562024-02-20T12:01:33.975-05:00Glatt Consulting, LLCGlatt Consulting LLChttp://www.blogger.com/profile/12592160588756768110noreply@blogger.comBlogger62125tag:blogger.com,1999:blog-6813769522779270856.post-56877230580630222152011-11-02T15:47:00.001-04:002010-11-02T16:08:49.531-04:00Glatt Consulting, LLC Page TestWelcome to Glatt Consulting, LLC.<div><br /></div><div>We are a consulting resource for credit union leaders nationwide. Executives and directors alike turn to us for strategic planning assistance, to identify and analyze growth opportunities, and to improve team performance.</div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-53998615786065026332009-10-30T09:57:00.003-04:002009-10-30T10:04:15.243-04:00Blog MoveYou may have noticed, but the Glatt Consulting website (<a href="http://www.glattconsulting.com">www.glattconsulting.com</a>) has moved! As part of the move we have made a few site adjustments, modifications, etc. This was part of a bigger transition of email hosting and other back-office functions. <div><br /></div><div>It is important to note, however, that the move has impacted the blog as well. This blog site will no longer hold our captivating thoughts on credit union leadership and management issues. But wait! We have simply moved the home of our comments to the new website. </div><div><br /></div><div>If you want to move your subscription with it, simply check out the following link:</div><div><br /></div><div><a href="http://www.glattconsulting.com/blog">http://www.glattconsulting.com/blog</a></div><div><br /></div><div>Simple! On that page you will find the links to subscribe to the new blog location.</div><div><br /></div><div>We are looking into how to easily transfer existing subscriptions to the new location, but in the meantime you can take control of that process by visiting the new site and subscribing yourself. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-66991946203163478782009-08-27T10:23:00.002-04:002009-08-27T10:28:47.625-04:00FDIC WoesJust received a notice regarding the low level of the FDIC insurance fund (see below). It seems most credit union CEO's I have worked with this year hold the belief that the NCUSIF will run into similar issues - and once again hit the industry with an assessment. Here's hoping that won't happen, but given the overhang of delinquencies and earnings issues how can it not?<div><br /></div><div><blockquote>The Federal Deposit Insurance Corp.'s fund that protects more than $4.5 trillion in U.S. bank deposits fell to just $10.4 billion at the end of June, as the banking industry continues to struggle with souring loans and regulators brace for pain in trying to clean up the mess.<br /><br />The level of the FDIC's fund, the lowest since the savings and loan crisis, almost guarantees that the government will have to hit the banking industry with another special fee to recapitalize its reserves. The agency said it had 416 banks on its "problem" list at the end of the second quarter, up from 305 at the end of March.</blockquote><blockquote>-Wall Street Journal</blockquote><blockquote>http://online.wsj.com/article/SB125137695691263385.html?mod=djemalertNEWS</blockquote></div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-90472331211878818912009-08-11T22:44:00.003-04:002009-08-11T22:52:14.636-04:00Healthcare ReformThough not a credit union-specific topic, I thought I would share a few comments I recently posted to a news publication regarding healthcare reform. Healthcare costs are certainly an issue for the industry, in fact I spoke yesterday with a credit union leader about the cuts they were making to benefits in response to the economic environment. In any case, here is my position (which, fundamentally, supports the further expansion of the HSA gains credit unions have made in recent years).<div><div><blockquote>I happened to visit my doctor the other day and we got to talking about the healthcare issue. He is not in favor of the currently proposed plan(s). I asked him his opinions on a more effective solution. He said we already had one - Health Savings Accounts. I agree with him, and I have a HSA (self-funded as I am a self-employed small business owner).<br /><br />His is one of the few doctors offices I have been to where they actually divulge the cost of the treatment BEFORE the treatment. With them, at least, you can match what you were told up front to the myriad bills, EOBs, etc. that come flooding through the mail as a result of the visit. You can also make more informed decisions about your treatment options.<br /><br />Contrast that to an antibiotic recently prescribed for a family member. Their doctor handed them the prescription, and when they went to fill it they found it to be VERY expensive - about $300. They called the doctor back and asked about alternatives. His comment was, "I thought you had a good prescription plan." He then prescribed another antibiotic at about $250 less - which turned out to be no less effective.<br /><br />We need healthcare reform, but mainly in the way doctors communicate options and the way consumers pay for those options. If cost is out of sight, then it is out of mind. What we have before us now is unsustainable change - a simple consolidation of the current problems into one location rather than a lasting solution.</blockquote></div></div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-59943439839333931482009-08-04T11:18:00.004-04:002009-08-04T11:31:13.606-04:00Upping the Planning AnteI am, at the moment, in Las Vegas preparing for a session at the National Director's Convention. My session is called "Black Belt Planning." I will be covering two methodologies for planning, one called Strategic Pathing and the other called Strategic Positioning. While both methods aim to elevate the strategic discussion at the top level of an organization, each has a unique starting point. <div><br /></div><div>Strategic Pathing is structured as in inward-out experience, with the development of strategic opportunities (paths) generated via an internal starting point. Positioning, on the other hand, is structured as an outward-in experience, with a market-defined starting point used to uncover strategic opportunities.</div><div><br /></div><div>While planning is more art than science, these methods add some "science" to the process, enabling organizations to make more informed (and less risky) strategic decisions. </div><div><br /></div><div>Once the session is wrapped, I will share more of the methodologies in the blog and on the GCLLC website. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-82617180482234265122009-07-14T11:48:00.006-04:002009-07-14T12:01:30.070-04:00No Obligation Necessary! It's Free!I saw a press release on an upcoming event being held at a large west-coast credit union. The event covers mergers (among other topics) and is open to any credit union. Even better, it is free. <div><br /></div><div>What it reminds me of is the old pitch process for timeshares. </div><div><br /></div><div><b><i>"All you have to do is sit through this <span style="text-decoration: line-through;">interminable</span> exciting presentation, get your free <span style="text-decoration: line-through;">tchotchke</span> TV, and that's it! No obligation whatsoever!"</i></b></div><div><br /></div><div>Right. People signed on the dotted line just to get out of pitch purgatory. And, if they didn't sign up right then they were quickly ushered to telemarketer hell.</div><div><br /></div><div>So, this large (troubled) credit union is hosting an event for credit unions to discuss mergers, free! Do participants also get a free t-shirt with a target on the front just for attending?</div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-90156865530793159772009-04-10T09:30:00.002-04:002009-04-10T09:47:22.697-04:00FDIC Actions Stir Bank ResentmentI thought I would share two interesting articles from NPR. The first covers the banking sector/FDIC pain of covering the insurance costs of failed banks. Sounds like a familiar story. The article is here:<div><br /><div><a href="http://www.npr.org/templates/story/story.php?storyId=102918606" target="_blank"> http://www.npr.org/templates/story/story.php?storyId=102918606</a></div><div><br /></div><div>The reason I share it is that during many of the NCUA informational webcasts they fielded questions about whether banks faced the same dilemma. Clearly they do, but this article gives some perspective on scale.</div><div><br /></div><div>The second article is called "The Anatomy of a Takeover." It profiles the FDIC takeover of The Bank of Clark County, offering an interesting insider perspective of a conservatorship, though in this case the bank was quickly given away to Umpqua Bank.</div><div><br /></div><div>The article is here:</div><div><br /></div><a href="http://www.npr.org/templates/story/story.php?storyId=102384657" target="_blank">http://www.npr.org/templates/story/story.php?storyId=102384657</a></div><div><br /></div><div>One can imagine when reading the article how the WesCorp conservatorship went down. When I close my eyes I can see NCUA staff hiding in the bushes along Overland Court, ready to swarm, with Blackberrys poised like pistols. </div><div><br /></div><div>Take note of the reader comments at the end of the article. </div><div><br /></div><div>Happy reading! </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-23281216909225297162009-03-26T16:37:00.003-04:002009-03-26T16:58:46.718-04:00Seven Year Spread - NCUA Responds to Booking NCUSIF ReplenishmentThe NCUA just released a media advisory suggesting that they intend to seek congressional approval to allow credit unions to book the NCUSIF replenishment over seven years. This is certainly good news, and credit unions everywhere should follow the NCUA's suggestion of actively communicating with congressional leaders to ensure the required legislative changes are passed into law.<div><br /></div><div>This does not, however, address the lack of transparency with regard to the WesCorp/US Central conservatorships. My fear is that credit unions, seeking to avoid a fight, will consider this seven year spread a victory and call it a day. We cannot let that happen if only because the relationship between the NCUA and the industry is in such poor condition. The complete breakdown of trust in the NCUA (as referenced in my earlier post today as well as by CUNA's Dan Mica and Callahan's Chip Filson) will make the entire regulatory and supervision process ineffective and potentially harmful.</div><div><br /></div><div>I implore all credit unions to consider the NCUA's decision a blessing, but to not rest on the decision. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-85697194271602244482009-03-26T14:07:00.004-04:002009-03-26T15:00:26.302-04:00Closed-Door Transparency<div>A few weeks ago, two NCUA representatives went on camera at NAFCU and said that the industry needed to come together to save the corporate system. In fact they urged that industry cooperation was the only way to salvage the system. They indicated that every federally insured credit union, in the spirit of industry cooperation, would have to contribute even if that meant widespread negative earnings and potentially the sacrifice of hundreds of credit unions. </div><div><br /></div><div>Let us all be clear on the definition of cooperation. It means the process of <b>working together for the same end</b>. What we have so far is not even close to cooperation. NCUA so far has not only failed to meet the specific definition of cooperation, they can't even claim to be working within the spirit of the definition. Just today they met in a closed-door session presumably to discuss how to further compel the industry to "cooperate" with their directives. </div><div><br /></div><div>If cooperation is what they want, why the closed-door deliberations? </div><div><br /></div><div>If cooperation is what they want, why not release the PIMCO details?</div><div><br /></div><div>If cooperation is what they want, why not call together leaders of credit unions from around the country for town hall meetings?</div><div><br /></div><div>If cooperation is what they want, why hide behind audio-based "webcasts" that spare them from seeing the true emotion their actions have stirred up?</div><div><br /></div><div>I have talked to many credit unions, from New York to California, and the position each has taken is that the process that the NCUA has utilized in its corporate efforts is wrong. One credit union even likened the steps taken with regard to WesCorp specifically as taxation without representation. Back in the day, those words were enough to start a revolution. </div><div><br /></div><div>This isn't cooperation. This is compulsion. </div><div><br /></div><div>Perhaps a revolution is what we need. It is time to put right the relationship between the NCUA and the credit union community, and a peaceful yet forceful revolution may be the catalyst for long-needed change. The NCUA exists because of credit unions. Credit unions do not exist because of the NCUA. Last I checked, the NCUA came to being in 1970. Long before then the credit union community was, cooperatively, seeking to serve member-owners. </div><div><br /></div><div>I am certainly not arguing for the NCUA to go away. I am not arguing that the US Central or WesCorp conservatorships should not have happened (after all, how would I know without any supporting data). I am not arguing that we should go back to the credit union community that existed in the 1960's. What I am saying, and what I firmly believe, is that we need to get back to a peaceful and intelligent, cooperative, relationship with the agency. That means that the agency must be true to its desire for industry cooperation, actually seeking to cooperate rather than mandating poor policy.</div><div><br /></div><div>While I feel bad for the fine folks that work hard at WesCorp and US Central, many of whom I know personally and count as friends, this may be the best thing to happen to the industry in some time. NCUA, through its own efforts, finally forced into the sunshine the poor relationship that exists between itself the credit union community. </div><div><br /></div><div>For the sake of 89 million Americans, this must be corrected.</div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-55502446158255391412009-03-03T14:35:00.007-05:002009-03-03T15:21:38.876-05:00Power to the PeopleWhen we conduct strategic planning sessions, a key agenda item is working through the major political/regulatory, economic, social/demographic, and technological trends and issues confronting the industry. This puts strategy into perspective, and also helps to identify potential opportunity. <div><br /></div><div>Since late 2007 one of our presentation slides covering regulatory issues has included this statement: </div><div><blockquote>The trend is toward more regulation and oversight of traditional services. “New” credit union services may face a more reluctant regulatory audience, and income-producing products such as courtesy pay may be under the gun.</blockquote></div><div>Interestingly, Bloomberg today had this to say about Fed Chairman Ben Bernanke's testimony to legislators:<br /></div><div><blockquote>In another sign of tighter regulation to come, Bernanke said supervisors should have authority to bar new financial products that may be destabilizing to markets.</blockquote></div><div>Chairman Bernanke is certainly talking about such exotic products as credit default swaps and the like, but my concern is what <span class="Apple-style-span" style="font-weight: bold;">could</span> be defined as "destabilizing." It really depends on the person writing the definition. Taken to an extreme, there are credit union products that could be classified as "destabilizing" and therefore subject to a greater regulatory scrutiny.<br /></div><div><br /></div><div>I know that there are many leaders within the credit union community that believe certain products (such as courtesy pay and payday loans) should be purged from the credit union system all together. Whether that assessment is right or not, I think we can all agree that members should have the say over what should and should not be offered at "their" credit unions rather than politicians/regulators far removed from having to serve the day-to-day needs of consumers making that determination.</div><div><br /></div><div>I believe that consumers can be the greatest regulator if given the chance. They are already responsible for the rise and fall of many a company. If they don't like something, they move on - enriching the new while teaching a lesson to the old. The problem, as I see it, is that they have been taught not to worry about that responsibility for a range of services and activities. They have been taught not to care about the strength of their financial institutions, because regulators have taken on that responsibility. They have been taught not to be concerned with the safety of airlines, because regulators have "made sure" that every plane in the air is in top condition. They have been taught not save for the future, because the Washington is "saving" for them. </div><div><br /></div><div>The net result is a misplaced trust that drives consumers to accept certain promises as truth even when those promises have no such foundation. </div><div><br /></div><div>To be honest, I trust the wisdom of members to tell us what we should and shouldn't offer via their basic consumer response to true competition. We need to make sure, however, that they are aware of their responsibility and encouraged not to abdicate it to anyone or anything else.</div><div><br /></div><div>The alternative is more misguided regulation, which in my opinion only serves to further remove people and institutions from the responsibility of their actions. We cannot afford any more of that. </div><div><br /></div><div>Power to the people. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-73305734138342092032009-02-25T12:59:00.004-05:002009-02-25T13:59:16.072-05:00Consulting the Social NetworkI am a member of a few different "social networks." Every day I try to determine whether it is worth the time to keep my profile active, and to feed the network with the awe-inspiring details of my life (in case you were wondering, that was a bit of sarcasm). My recent deliberations got me to thinking about how professionals have started using these networks. <div><br /></div><div>On one of my networks, a large part of the professional appeal seems to be posting "help me" questions. These are questions people ask when they want help with a vexing problem, but they don't want to pay a consultant for an answer. I can respect that. Consultants are an expensive option, especially for simple issues. The social network is inexpensive and places the "wisdom of crowds" at your disposal. </div><div> </div><div>One thing that gets me, though, is when people post more complicated requests to their social network, then trust the advice they receive. Yes, people defend the practice by saying "why reinvent the wheel?" I can buy that, but only to a certain extent. If someone has encountered the exact same problem in the past, for the exact same circumstance, and have the exact same underlying corporate structure (strategy, organizational design, culture), and subsequently offer a response to your challenges, then by all means use the suggestion. It should fit. But how many institutions in the world are <span class="Apple-style-span" style="font-weight: bold;">exactly</span> the same? </div><div><br /></div><div>Every organization is different, in fact every organization should strive to be different. Compelling and calculated differences form the basis of competitive advantage. If you have an organization that truly strives to develop an advantage, why would you ever make use of someone else's response to similar challenges? All you end up with is a second-class implementation. </div><div><br /></div><div>Furthermore, who is to say that what your network proffers is actually right? What if you need wheels for your cart, and the best your network has created are square wheels. With a firm "try this - it has worked great for us and should work just as well for you" recommendation, you are on your way to having a cart just as bad as everyone else's.</div><div><br /></div><div>This brings me back to consultants, and their value to organizations. A good consultant should never apply turn-key solutions to your institution. A good consultant should work to assess your strategy, build an understanding of your organizational design, and get to know your culture. A good consultant should develop a relationship with you so that their recommendations are deeply related to your organization and crafted to succeed, given your own unique infrastructure. </div><div><br /></div><div>Social networks are not that deep. You may find, via a feed, that someone in your network is off on a trip across country to visit a long-lost aunt. That knowledge does not make their relationship with you any deeper, and it certainly does not make their uninformed recommendations to you informed, accurate, or correct.</div><div><br /></div><div>Interestingly, social networks and consultants start from the same basic point - experience. Those with experience in the stated challenge rise to answer, but here is where they differ: The social network response is, "Here is what worked for me, it should work for you." The consultant response is, "Here is what I have seen, let's determine how it applies to you, given the unique circumstances of your situation." </div><div><br /></div><div>I suppose I will continue participating in these social networks because they do encourage me to think, even if the thought they inspire goes against some facet of their proposed usefulness. And besides, I feel like that long-lost aunt of a friend, of a friend, who was recommended to a friend of my friend, is a member of the family. Saying goodbye would just be too hard.... </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-8979035591637543862009-02-02T14:03:00.003-05:002009-02-02T14:24:35.209-05:00A Stabilizing Punch in the FaceI just returned from a credit union planning session. One of the topics of discussion was how much of an impact last week's NCUA decision on the "stabilization" efforts of the corporate credit union system would have on the industry's future. The concern this credit union shares with credit union leaders across the country is that the NCUA is destabilizing natural person credit unions with their corporate rescue efforts. <div><br /></div><div>A widely held perspective in the circle of clients we support is that hundreds of credit unions will be driven to untenable financial positions if this plan is enacted. That every corporate credit union will "survive" while 500 credit unions are driven out of business. </div><div><br /></div><div>It is certainly too soon to tell if this ill-conceived plan will have such consequences. Perhaps they will revise the plan with something a bit more sensible, though I have my doubts. Unfortunately, every credit union that spent the fall deliberating deeply on the most sensible pathway through this downturn just had their well-devised plans dealt a blow. </div><div><br /></div><div>I suppose that Mike Tyson is worth quoting here. He apparently once said "everyone has a plan . . . until they get punched in the face." Well said Mr. Tyson. Well said. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-40419556311719156892009-01-13T15:27:00.003-05:002009-01-13T16:07:46.808-05:00Bye, Bye Citi...The recent announcements and news articles covering Citi are truly interesting. Take this headline delivered via the Wall Street Journal a few minutes ago:<div><blockquote>"Citigroup, under pressure to rapidly downsize, is preparing to unveil a major reorganization that will mark a further step toward dismantling the financial conglomerate..."</blockquote></div><div>I wonder where this pressure is coming from!? Just kidding. I have an idea from where and by whom. In case anyone was wondering, this is what happens when the "banking experts" elected to Congress begin running financial institutions. To say that I am a bit concerned about where this all may lead is an understatement. </div><div><br /></div><div>Here is an example of the factors driving my concern: the recent decision on the cramdown option proposed by enlightened Senators and now "endorsed" by Citi. This option would allow bankruptcy judges to set the principal value of homes in bankruptcy court. I find it hard to believe that this is the best idea available for stemming nationwide declines in home values.</div><div><br /></div><div>In any case, the cramdown option was first proposed last year by Senator Dick Durbin of Illinois. It was rightfully met with resistance by lenders and other housing groups at the time. This year it is now seen as the best path forward. Citi changed its tune and is on board, perhaps because of the small payment of $25B awarded the institution as a result of the bailout.</div><div><br /></div><div>Anyone who has read Ayn Rand's "Atlas Shrugged" likely sees the interesting parallels between the fictional Washington of the novel and the Washington of today. </div><div><br /></div><div>I am no conspiracy theorist, and generally believe most people in government try to do their best, but often policy-makers are ill-informed (this includes policy-makers of all kinds, including a number of financial institution boards). Ill-informed decision-makers make ill-informed decisions. I believe that the folks at Citi know this isn't the right path, but given their newly minted allegiance with Washington they have no choice but to follow it to its end. </div><div><br /></div><div>While credit unions have been largely locked out of the bailout game, perhaps this is the best thing going for the industry. We owe favors to no one but the members who own us. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-24698022537665127522008-12-18T10:09:00.004-05:002008-12-18T10:54:22.109-05:00A 2002 Web Leader!We are currently researching a selection of credit unions for a client project. We came across something in our research that I had to share. One of the websites supporting a credit union we reviewed proudly proclaimed that the credit union was the 2002 recipient of NAFCU's "Best Credit Union Website" award. From the looks of it, nothing on the site has changed since. <div><br /></div><div>It's as if they were so proud of that moment, they decided they would go out on a high note. It seems like the reasoning is, "It can't get any better, so let's not even try." </div><div><br /></div><div>If the world had not changed since 2002, especially with regard to online activities and advances, I would have no problem with an institution that made minor or even no adjustments to a website. But we all know that is not the case. 2002 was six (nearly seven) years ago! Even within the last two years we have seen incredible change in the online world. Look back over the last six years and the changes are astounding. </div><div><br /></div><div>One of the major, non-technical changes with regard to the online world has to do with design. I was in New York City over the weekend and came across an interesting book that reflected on the transition in web designer skills. It used to be that the majority of web designers had print design training, and they had to adapt their skills to the unusual world of online design and layout as requests for web sites came in from clients. Now, there are professionals trained directly in online design who have never had the challenge of adapting skill sets from one medium to another. </div><div><br /></div><div>My point is that website design, as much as the functional elements of financial institution web sites, has changed greatly over the last few years. <span class="Apple-style-span" style="font-style: italic;">Especially</span> since 2002. Any website that holds on to designs favored more than five years ago is jarring to look at, as it stands out starkly against other more updated sites. Were this a branch I was talking about, it would be similar to a credit union holding on to its look from 1975. Lots of strange color combinations, shag carpeting, etc. </div><div><br /></div><div>No successful credit union, to my knowledge, still has 1975 decor proudly displayed throughout its branches. Why? Because to date ourselves in such a way shows those that might open accounts with us that we are not up-to-date with the latest in financial services and professionalism. Yet when it comes to the online world, many still hold the mistaken belief that just having a web presence, whether well-designed by today's standards or not, is enough. It isn't. Design is important in the online world. </div><div><br /></div><div>Let's take pride in our appearance - online as well as in the real world. Our members deserve no less than that because as owners, the way we look is really a reflection on them! </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-54808008667628222542008-12-10T12:06:00.005-05:002008-12-10T13:02:07.445-05:00The Youth Shall LeadI've been carrying around a newsletter excerpt from State Farm Insurance for a few months. I've been meaning to comment on it in the blog. <div><br /></div><div>For awhile now, credit unions across the country have talked rather openly about the challenge to attracting "young" board members. I "quote" young, because young is a relative term. In any case, young board members are hard to come by for the industry as a whole. Some credit unions do well with Gen-Y board members, but they tend to be credit unions that have a field of membership largely composed of Gen-Y individuals. </div><div style="text-align: center;"><br /></div><div>USC Credit Union, the credit union for the University of Southern California, is a good example. They have a board seat reserved for a USC student to ensure that the credit union's governance process takes into account that vital membership demographic. In fact, it is through USC that we got to know Justin Ho - our resident Gen-Y expert and strategy consultant.</div><div><br /></div><div>What I found interesting about the State Farm piece, pictured here in the blog, is the depth of their effort to incorporate the youth. Rather than just talk about the need to incorporate youth into their strategy, they put action to words and desire. For example, they have the State Farm Youth Advisory Board, which is tasked with the responsibility of overseeing a program called the Signature Service Learning Initiative and the program's $5M budget. Imagine that! A youth board with real responsibility. </div><div><br /></div><div><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 214px;" src="http://3.bp.blogspot.com/_jCKcictHp1Y/SUAC1UafUCI/AAAAAAAAACo/nohZbSLGVHo/s400/contracts0022.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5278221878314356770" /></div><div><br /></div><div>I was curious, so I searched for additional information on this board. I found more than I expected at <a href="http://www.statefarmyab.com/" target="_blank">http://www.statefarmyab.com</a>. This initiative is working. I encourage you to check out the page listing the board members. I believe there are 29 young board members spread across the country.</div><div><br /></div><div>There is something to learn here. The push-back I get when talking to credit unions about youth board members, or volunteers in general, is that the youth are not all that interested in serving on boards and/or volunteering. That youth don't have time to participate. That the value of their participation may not be equal to long-standing board members. So on and so forth.</div><div><br /></div><div>What the State Farm effort shows us, what we can learn from, is that all we really need is the institutional will to actively recruit the next generation. The youth will participate. The youth will volunteer. The youth will engage. Now, maybe not in ways familiar to long-standing boards - but who cares about that? When it comes to deliberations on strategy and governance, tradition can be an albatross.</div><div><br /></div><div>If your credit union has the desire to incorporate the youth perspective at the highest level of the organization, make sure you have the will to proceed. The old saying "where there is a will, there is a way" rings true. Without the will, there is truly no way. If you don't have institutional will to proceed, then don't bother with a youth strategy because there is no way it will work.</div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-5267124441862072008-12-03T14:45:00.002-05:002008-12-03T14:55:02.956-05:00Slowing Economic ActivityThroughout the fall we often referenced the Federal Reserve's Beige Book during the various strategic planning sessions in which we participated. The Beige Book is a report published by the Federal Reserve Board that provides perspective on current economic conditions in each of the twelve Federal Reserve districts. It is usually updated eight times a year.<div><br /></div><div>The latest update was recently posted and is available on the Federal Reserve's website at:<br /></div><div><br /></div><a href="http://www.federalreserve.gov/FOMC/BeigeBook/2008/20081203/default.htm" target="_blank">http://www.federalreserve.gov/FOMC/BeigeBook/2008/20081203/default.htm</a><div><br /></div><div>As you might expect, the report is not all that rosy. In any case, if you haven't read the latest, or were not aware of the availability of the report, it is a good resource to use in the consideration of market strategies.</div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-20747949922182707792008-11-26T10:27:00.003-05:002008-11-26T10:55:24.600-05:00Puttin' on the RitzFrom a CU Times story posted today:<br /><blockquote>"Mica said he was unsure but hopeful that despite belt tightening and travel costs the GAC conference would top the 5,000 from 2007 noting, however, the trade group is running a heavy ad schedule “doing mailings, videos, using league publications—everything we can” to ensure a strong industry presence in February."</blockquote><div>Hello!? While I do agree that this is certainly a good time to tell the credit union story to new, incoming congressional leaders, why don't the powers that be use their marketing budget to subsidize the attendance of credit union CEO's and Board Chairs. If the message is truly the most important part of the outreach, then a simple "the trip is on us" offering would speak volumes about what the GAC is truly all about - the personal interaction between credit union and congressional leaders. <br /></div><div><br /></div><div>From my perspective, a marketing effort to encourage credit union leaders to attend a conference at this time seems like money wasted. The credit union leaders that I know are diligently working to cut all expenses that do not directly support members in this time of need. While meeting congressional leaders is important, it is certainly not more important than meeting member needs. </div><div><br /></div><div>Which brings me to subsidizing the event. Why force credit union leaders make the choice? Drop the $895 attendee fee and run the conference at break even - or even a loss? If this is all about credit unions, then this time of "belt tightening and travel costs" should serve as an opportunity for the association to give back to credit union members. </div><div><br /></div><div>This enhanced spending on marketing seems like an effort merely to break an attendance record than to truly serve the industry.<br /></div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-3696587616360116722008-11-25T09:20:00.002-05:002008-11-25T10:05:13.061-05:00Lender of Last Resort?I just saw the headlines that the Federal Reserve is creating a facility to support consumer and GSE debt. Here is the statement:<br /><blockquote>The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).</blockquote><div>At some point, you have to wonder whether in the future we will need financial institutions at all. The way this seems to be headed is to a "central bank" system. That is one institution, owned by taxpayers, chartered to lend directly to the american population. Good bye banks, credit unions, thrifts. Who needs them when you can get a subsidized loan from your local FedBank? <br /></div><div><br /></div><div>Okay. I <span class="Apple-style-span" style="font-weight: bold;">am</span> being a bit dramatic here, and leaning to a belief not entirely supported by the facts as they stand today, but it sure seems that the government is getting closer and closer to stepping on the toes of traditional banking institutions. True, we have a short-term problem in need of attention, but I am more or less drawn to the conclusion that in the haste to push more credit out the door in an effort to "fix" the economy we are throwing caution to the wind, making decisions that could leave a long-lasting scar on our banking system.</div><div><br /></div><div>Yes, the efforts of a few (relative to the many fine financial institutions chartered to serve the credit needs of Americans) have "left a mark" as they say. However, in Washington's attempts to correct those mistakes, the sound business practices and efforts of surviving banks and credit unions are being undermined. In negatively impacting solid strategy, Washington is serving as a cause of the demise. </div><div><br /></div><div>Consider the case of IndyMac. IndyMac failed, sort of. In a preemptive effort the bank was put into conservatorship. It is essentially being run by the FDIC, a government regulator. The FDIC has an aggressive pricing policy at IndyMac. The rates for most of their deposit products, especially short-term certificates, handily beat national averages. </div><div><br /></div><div>Here is why that is a problem. A recent Wall Street Journal article covered the increasing competition for consumer deposits. They called it a deposit war. IndyMac is undeniably a participant in this war. Because of the FDIC's own efforts at IndyMac, the cost of funds for institutions working the same market have to be higher just to retain existing accounts. In establishing an above-market pricing strategy the FDIC is directly competing with institutions that they regulate. Competition is absolutely a good thing, but it isn't really a competition in this case.</div><div><br /></div><div>Back to my original doomsday perspective. I truly believe that the banking system will be forever changed due to the efforts of regulators. To be clear, I am not talking about investment banks, et. al. I am referring to the ABC National Banks and XZY Federal Credit Unions now serving people in communities across the country. </div><div><br /></div><div>The real question for me is not whether the system will be changed, but just how drastically. Unfortunately, that question will likely remain unanswered for some time. We won't know until the dust settles, the sky clears, and we see what we have left.<br /></div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-76308302725965262642008-11-20T15:38:00.002-05:002008-11-20T16:34:50.482-05:00Courage and GraceOver the last four months I have traveled the country working with credit unions on strategy and direction. In many ways it felt like being on a campaign trail. In one stretch, I went from Northern California to Southern California to North Carolina to Southern California to Oregon and back to North Carolina - all in a seven-day period. Like I have said to many people over the years, I truly love what I do but I am not all that fond of the "getting there" part of the job!<div><br /></div><div>In any case, I thought it important to share a perspective I developed this year of the character of the leadership in the credit unions with whom I have worked. The words courage and grace come to mind. </div><div><br /></div><div>It is no secret that a number of credit unions are facing the unpleasant prospect of mounting loan losses. To be sure, this is not due to lax standards, fraud, or mismanagement. Rather, the housing slide has had unforeseen consequences in certain markets, severely impacting members and the credit unions to which they belong. </div><div><br /></div><div>In working with credit unions on the response to members' needs during this crisis, I have seen impressive, selfless, courageous, graceful decision-making as leaders evaluated and chose from options that no one would ever desire.</div><div><br /></div><div>Some argue that the CEOs and boards running a number of our nation's credit unions are not "professional grade." These naysayers suggest that many are in positions of leadership only because of natural attrition in a segment of the financial industry that lacks aggressive, competitive pressure. I don't buy it. I never will.</div><div><br /></div><div>The leaders I have seen, in action, defining the strategies that they feel will give their institutions the best chance to succeed in <span class="Apple-style-span" style="font-weight: bold;">meeting the needs of members</span> (a novel concept) are some of the best I have ever come across, and I have met some very interesting, well-known business titans in my travels. </div><div><br /></div><div>I think that the key to their effectiveness, and what ultimately leads to the right decisions with regard to strategic direction, is that they understand the core focus of credit unions. It's the people. They get that words like "members," "customers," and "staff," describe a human element, not some lifeless, faceless group.</div><div><br /></div><div>To our clients, and you know who you are, regardless of how the economy goes or the pain that it may cause your members and perhaps your bottom line, rest assured that the credit unions you lead will emerge stronger than ever because of you. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-60678189262707576322008-10-30T07:14:00.002-04:002008-10-30T07:21:53.597-04:00Still LivingFor those that know about our services, it should come as no surprise that I have not posted a blog entry in a few weeks. This is high season for strategic planning, which means lots of airplane flights, all-day sessions, etc., which leave little time for updating the blog. In fact, I suppose I have some degree of frustration that I don't have 36 hours in the day to get to all the "fun" stuff like blog posts and podcast recording sessions!<div><br /></div><div>There is so much to write about these days, especially with regard to strategy. These "unprecedented" times are driving perhaps the most thoughtful and intense strategic planning sessions I have seen in some time. Rest assured that I have notes galore and will catch up soon! </div><div><br /></div><div>In the meantime, it's back to the airport and on to California. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-38079302769272546312008-09-30T08:58:00.002-04:002008-09-30T09:44:01.932-04:00The Rise of the Credit UnionThere is a good article in today's Wall Street Journal by Jason Zweig. It is in the "Intelligent Investor" section. This was my favorite quote: <div><blockquote>Even though Wall Street is dead, innovation is not: In the months to come, clever new financial go-betweens will spring up and find a way to get that cash flowing again. It's hard to see how a depression could get under way when so much capital is waiting in the wings.</blockquote></div><div>In his article, Mr. Zweig argues that non-financial entities have approximately $1 trillion in cash on their books. It is this cash, he states, unlocked as investments in innovative ideas, that will fuel growth. He is probably right, and since I am no economist who am I to argue, but I do think that credit unions should be counted among the entities to which he refers. True, credit unions are not new, and the industry certainly does not meet the definition of non-financial institution. But the industry does meet two of the qualifications identified on Mr. Zweig's article. </div><div><br /></div><div>First, the industry is full of clever institutions. Credit unions have long prided themselves on "knowing" their members. By combining this knowledge with clever creativity there is no reason why the borrowing needs of small businesses and consumers alike cannot be met by the industry <span class="Apple-style-span" style="font-weight: bold;">today</span>.</div><div><br /></div><div>Second, the industry has the capital. True, there are credit unions that made unfortunate decisions over the last two or three years, and as these stories make the rounds other credit unions reflexively tighten up, but by-and-large the industry is well capitalized. The argument can certainly be made, even in the midst of bank failures (I mean, preemptive purchases!) and general financial uncertainty, that this capital needs to be unlocked for the benefit of members <span class="Apple-style-span" style="font-weight: bold;">today</span>. </div><div><br /></div><div>Remember this?</div><div><blockquote>The crop failure and famine of 1846 caused Schulze-Delitzsch to organize a cooperatively-owned mill and bakery which sold bread to its members at substantial savings. Schulze-Delitzsch took this cooperative notion to address the needs of credit. In 1850, he organized the first cooperative credit society, known as the "people's bank."</blockquote></div><div>While we are not now suffering from literal crop failures and a resulting famine, we are in the midst of a financial failure and famine. Members and businesses need credit, like food, but credit is scarce, as in a famine. These people may not be "A" paper, but they are members. Their character is likely similar to the character of those joining that cooperatively-owned mill. Good people, but suffering from unfortunate circumstances not of their own making. </div><div><br /></div><div>If, as Mr. Zweig's article asserts, the path out of today's dark forest will be cleared by innovative businesses making clever use of their cash, I say that credit unions should position themselves as a key part of this group. History shows that credit unions have consistently risen to the occasion, meeting the needs of members during tough economic times. This year, and into 2009, is a time for credit unions to do what they do best. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-22747304413395592692008-09-25T11:31:00.002-04:002008-09-25T12:03:56.002-04:00Danger AheadI've found two interesting, and somewhat related, items on the Internet this week. The first is an article referencing regulator displeasure with a campaign put on by Texas Dow Employees Credit Union. Apparently the credit union put forth an effort to ease member fears about the safety of deposits--and the institution in general--with a dedicated website called www.tdecusafeandsound.org. Regulators, notably the FDIC and the Texas Credit Union Commissioner, felt that the credit union was suggesting that bank deposits were not as safe as credit union deposits. This led to demands that the credit union remove the site and the "offending" references.<br /><br />The second item, featured boldly on the home page of CNN today, presents a detailed story on shady bank practices. The story focuses on two former employees who, I believe, worked for BofA. The tell of their efforts as employees, at the direction of their employer, to max out customer credit lines. They call it a great big con. In fact, the title of the story is "How banks sucker customers for big $$." <br /><br />What I find so offensive here is that while certainly some entities engage in practices that I would consider borderline immoral, the tone taken by the story suggests these practices are more common than an aberration. In fact, these practices (if they are true at all) are decidedly uncharacteristic of most of the credit unions and community banks in the country. <br /><br />That leads me back to the efforts of TDECU. I didn't see the site before its removal, but my understanding is that they were trying to suggest that their strategic decisions kept them away from taking the kinds of risks that are diving certain banks towards insolvency. Compared to such banks, the credit union is safe and sound. The regulators didn't like that, but I wonder where their outrage is when it comes to such news articles that paint a picture of an entire banking system built to gouge/sucker/rip off consumers.<br /><br />Either regulators need to set the record straight for jaded journalists, or go easy on the banks and credit unions trying to keep their good names from faltering due to the actions of a few.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-36470572238609515672008-09-18T08:37:00.001-04:002008-09-18T08:37:52.062-04:00Banking on Mass HysteriaThis just in from the Wall Street Journal:<br /><blockquote>"The problem with trying to separate perception from reality in the confidence crisis gripping global finance is that perception is the biggest factor shaping reality."</blockquote><div>I find it interesting how, when planning strategically, we often we fail to truly consider the impact of "news" on the psyche of local consumers. I have facilitated a fair number of sessions, and in many cases the local economy in which a client operates is not as bad as national averages. This leads to a false sense of security for planning participants - not because they feel they are immune to downturns, but because they believe consumers are immune to the constant hum of negative perspective. My concern is that consumers will begin to believe they represent the average if they hear it enough. Perception then becomes reality regardless of the real economic situation, ultimately having a measurable impact on the performance of their trusty credit union.</div><div><br /></div><div>More than ever, we are encouraging planning clients to consider strategy for effectively informing members of the status of the "real" economy - that is, the economy in which members live and the credit union operates. It is critically important that members be given informative guidance on local trends that are meaningful, and, no matter whether the trends are positive or negative, how the credit union can play a role in helping members make situationally-appropriate financial decisions. </div><div><br /></div><div>In your planning session this fall, make sure your participants understand both the local and national economies, and certainly the differences between the two. Then, ensure discussion on how to maximize the uniqueness of your own circumstances. With big-name banks suffering huge declines (imagine your response if a few years ago someone told you that WaMu might have to sell off its branch network just to survive!), your ability to flexibly adapt to the local scene might just make for one banner year. If effective strategy is defined and executed, you will undoubtedly be able to offer localized support to members unmatched by national competition.</div><div><br /></div><div>The old saying "all politics is local" certainly can apply to economics as well. Take advantage of your local knowledge, communicate your advantage to members, and in the process build long-lasting relationships that members will come to appreciate and treasure for years to come. </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-25590118171739258822008-09-17T11:59:00.002-04:002008-09-17T12:23:09.468-04:00Lovin' the Merger Comments!I don't know how many people saw the recent SignOnSanDiego article on the home banking problems experienced by California Coast Credit Union. This is the credit union emerging from the "merger of equals" between California Coast Credit Union and First Future Credit Union. If you haven't, it is worth a look - not because of the article itself but because of the reader comments associated with the article. <a href="http://www.signonsandiego.com/news/business/20080903-9999-1b3credit.html" target="_blank">You can find it here</a>.<div><br /></div><div>Mergers are rarely perfect, and the process itself can often be messy, but it has been awhile since I have seen such interesting back-and-forth commentary tied to a news article on the subject of a credit union merger and resulting member service. Welcome to the world of user participation, where your words and actions as a financial institution can be used against you in a very public way. </div><div><br /></div><div>While this is a minor example, it serves nonetheless as a classic example of the "reputation risk" brought by Internet comment boards. California Coast appears to have managed it well, but these comments will take years to go away, if ever. This means that potential members looking for information on the credit union could turn this up in a search. I wonder if the comments would influence the decisions of such potential members? </div><div><br /></div><div>If you haven't done so lately, it is worth visiting the major search engines for a quick query on your brand. Hopefully everything you find will be positive! </div>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6813769522779270856.post-82143999490356638382008-09-02T14:24:00.004-04:002008-09-02T14:54:48.260-04:00Fire Your Compliance Staff!I just wrapped up preparation for an upcoming workshop on credit union collaboration and cooperation. The workshop, a pre-conference activity held in conjunction with the upcoming <a href="http://www.cuconferences.com/DRT08/DRT08Agenda.htm" target="_blank">National Director's Roundtable Conference</a> in Las Vegas, is designed to work attendees through the arguments for credit union cooperation. <div><br /></div><div>One frequent argument for cooperation focuses on compliance. As the argument goes, this function, while critical, is really not a core function. In other words, success as a credit union is not mandated by a high-functioning compliance department. Success is really defined by being in touch with member needs, and offering competitive rates and terms on both deposit and loan products - not by completing suspicious activity reports. Rather than devote precious resources to compliance personnel, the argument continues, share the burden and costs of compliance with other credit unions. </div><div><br /></div><div>I've heard the same argument related to human resource and information technology departments. <div><br /></div><div>I am really looking forward to this session, which I am told is gaining serious traction for a pre-conference workshop. I plan to work with session participants in getting to the root drivers of cooperation, and to discuss if these drivers strengthen the competitive advantage for cooperating credit unions. I believe there are compelling reasons for cooperation, which is truly good news for credit unions feeling competitive pressures or looking for greater efficiency without going through a merger. I think you can gain a 50bp advantage, or more, with specific cooperative efforts.</div><div><br /></div><div>Sorry, but I won't divulge the contents of the session and the support for cooperation. For that you will have to register to attend the workshop! Suffices to say, it will be a dynamic session with active participation for all who attend. I hope to see you there. </div></div>Anonymousnoreply@blogger.com